Index Futures Do The 1-2-3
Have a look at the
S&P futures
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Dow futures
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they have not retraced more than three days without advancing. This is a
useful market characteristic, or dance, that you can exploit by buying
pullbacks. Stock index futures are now testing new highs. Given this
tendency, if they do trade lower more than three days, expect
a more substantial correction.
The metal with a Ph.D., copper, is up for the fourth
consecutive day in another powerful expansion bar. Copper is so-called
because its advance has consistently predicted improvement in the economy
months in advance. Copper is a metal heavily used in construction and
industry, and the long end of the yield curve is declining, providing
multi-decade lows in mortgage rates. December
copper
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List and was pointed out in last night’s Nightly
Futures Traders Report and is making good on its Off The Blocks
above the high of the last hour of trading Monday. Earlier entry could have
been had out of a Slim Jim formation.
Also from the Momentum-5
List,
December cocoa
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good on an Off The Blocks
long and closed again on its high of the session, the fourth 5% gain in five
days. How high is high here? There is formidable, defined resistance at 1225
(we closed at 1210). Cocoa is oversold, having rallied 23% in six
days.
In the grains, December wheat
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gapped down to a 20-day low. Given their quick descent from the Oct. 31 high
— three powerful down days — their inability to retrace more than 50% of
this latest swing down and gap-down break of support at 281 (which also
appears will be a neckline), this market could make a measured move, twice
the distance from the 297 head to the neckline which projects 265 as a first
objective.
January soybeans
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slightly. First support at 444. Beans need to hold 439 to keep the
immediate-trend, bullish scenario intact.
Poor economic figures
out of France, the UK and Japan are bolstering dollar gains. Dollar index futures
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are up 1.10 and were on the Multiple Days Low
Volatility List, suggesting an outsized move. Retail
figures are lower in the UK and French consumer prices are higher.
In Japan, factory use
fell to the lowest level since the government started keeping statistics on
this subject in 1978. The Japanese government is already running a huge
budget deficit as the Parliament prepares to approve $8.3 in fiscal
stimulus. Here you have huge deflation (which equals a declining tax base),
imploding industrial and employment figures, and rising budget deficits. The
yen is down after a two-week run to the 38.2% retracement of its 9/20 high.
Here, note that an Off The Blocks
strategy is keeping you out of this market which appeared at the bottom of
the Momentum-5
List. The emphasis shifts back to the short side for the yen. Public
officials in Japan also do not want the yen above 120, basis the spot
market. In September the Bank of Japan spent $26 billion intervening in currency markets to defend against a strong yen in the 120 area, yet another sign of too much spending in Japan.
Currency futures were closed due to Veterans Day. As
mentioned in Monday’s
Futures Setups, euro FX futures
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implosive tendencies. They gapped way down, but provided short entry out of
opening-range setups.